The U.S. Rockies offer Denver-based Tom Brown Inc. and other U.S. independents tremendous promise of reserve and production growth, says Jim Lightner, chairman, president and chief executive officer. "I can find you gas in any well I drill [there]. I just can't tell you if I'm going to make any money or not." Lightner spoke recently to IPAA members at a Houston program. Part of the economics of Rockies drilling programs is how much the market will pay for the gas upon production. Generally, Rockies gas fetches less on the market than Gulf Coast gas, for example, mostly due to the latter having greater infrastructure to get the product to many markets, in addition to the existence of many more gas consumers. "There is no gas demand [in the Rockies]...There's no industry. There's just nothing," he said. Rockies gas was fetching less than $1 per thousand cubic feet (Mcf) at one point last year while Gulf Coast gas was getting more than $2. The difference has improved this year, in part as a result of the May opening of a Kern River Pipeline expansion to markets in southern California. Three of the four largest U.S. onshore gas discoveries in the past 25 years have been in the Rockies, Lightner noted: the San Juan Basin (discovered in 1986) is producing 1.9 billion cubic feet (Bcf) of gas per day; the Powder River Basin (1991), 912 million (MMcf) per day; and the Jonah Field (1995), 750 MMcf per day. The fourth is the Barnett Shale (1981) in north Texas; it's producing 750 MMcf per day. All four are unconventional gas sources, Lightner noted. The greatest percentage growth-162%-in U.S. gas output in recent years has been from the Rockies. Of course, Lightner added, Rockies output was fairly small compared with output from other regions. "It's easier to grow something that's small." He is concerned that the U.S. oil and gas industry is pursuing relatively little exploration. Most of the country's new production during the past 10 years has been the result of exploitation programs. "We all buy each other's stuff and massage the heck out of it and sell it to someone else...This is a finite game...We've got to do something [to change this]." He noted that 7,400 wildcats were drilled in the U.S. in 1986, at the bottom of the severe 1980s oil-price bust. Yet, during 2002, a year of good oil prices and mostly good gas prices, 2,100 wildcats were drilled. "Where have all the prospectors gone?...We fired a lot of them or we turned off the spigot, and you can't turn exploration on and off." Removing drilling impediments from federal lands in the Rockies, which contains an estimated 137 trillion cubic feet of gas potential, would help, he said. Gas-price spikes help increase national awareness of diminishing U.S. gas supply. Otherwise, getting lasting public interest in supply "is like trying to turn the Titanic." -Nissa Darbonne
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